Mobile Demand Headwinds Challenge Skyworks Solutions
Skyworks Solutions Faces Temporary Headwinds in Mobile Demand
Skyworks Solutions (SWKS) is currently experiencing challenges in mobile demand, as indicated by analysts at Piper Sandler and Oppenheimer. This situation is considered to be transient but could have repercussions for the company's mobile business due to excessive inventory and declining unit sales. Additionally, Skyworks, a key supplier to Apple, is being impacted by the tech giant's loss of market share to rival smartphones. Furthermore, Cowen has taken action by downgrading Skyworks to a Hold from Buy, expressing concerns about a potential 10% socket loss. Piper Sandler and Oppenheimer have respectively assigned Skyworks a Neutral rating and a Perform rating.
Key Takeaways
- Piper Sandler anticipates that the mobile demand headwinds for SWKS will be temporary and foresees the clearance of excess inventory by the June quarter.
- Oppenheimer highlights reduced mobile market demand and the loss of Apple's market share as areas of concern for SWKS.
- Oppenheimer has assigned SWKS a Perform rating without a specified price target, while Piper Sandler has rated it as Neutral at $95.
- T.D. Cowen has downgraded SWKS to Hold from Buy and has reduced its price target from $125 to $90.
- T.D. Cowen anticipates a 10% reduction in sockets at SWKS, while also recognizing the company's strategic initiatives to reposition its business.
Analysis
Skyworks Solutions' mobile business is currently encountering temporary headwinds due to excessive inventory and a decrease in the number of units sold, leading to an impact on its stock price and market position. This situation is partly attributed to Apple's loss of market share to competing smartphones, which has affected Skyworks, a critical supplier. Analysts have forecast a potential 10% reduction in sockets, resulting in a downgrade of Skyworks' ratings, although the company's strategic repositioning efforts have been acknowledged. In the short term, this could affect Skyworks' revenue and profitability. The long-term implications may result in Skyworks shifting its focus towards diversifying its customer base and exploring additional business opportunities. This could potentially impact the partnerships, financial instruments, and market evaluations of other organizations linked to Skyworks, such as Apple, Piper Sandler, Oppenheimer, and T.D. Cowen.
Did You Know?
- Skyworks Solutions (SWKS): A company that offers wireless analog and mixed signal solutions for use in smartphones, automotive, broadband, industrial, medical, and Internet of Things (IoT) applications. Skyworks is a significant supplier to Apple and other smartphone manufacturers.
- Temporary mobile demand headwinds: Describes a short-term negative impact on mobile demand for Skyworks Solutions' products, attributed to excessive inventory and declining unit sales.
- 10% socket loss: Refers to a reduction in the number of chips (sockets) supplied by Skyworks to device manufacturers, estimated to be approximately 10%. This reduction could potentially impact Skyworks' mobile business and revenue. Cowen downgraded Skyworks to "Hold" from "Buy" due to this concern. However, it's acknowledged that the company is strategically repositioning its business.